LIMITS ENHANCED FOR DISCLOSURE OF PARTICULARS OF EMPLOYEES UNDER 217(2A) OF COMPANIES ACT 1956

LIMITS ENHANCED FOR DISCLOSURE OF PARTICULARS OF EMPLOYEES UNDER 217(2A) OF COMPANIES ACT 1956

The Ministry of Corporate Affairs has vide notification dated 31^st March 2011 enhanced the limits for the purpose of disclosure of particulars of employees in Directors Report as requisite under Section 217 (2A) read with Companies (Particulars of Employees) Rules, 1975 from the existing limit of Rs. 24 lakh/ year/ Rs. 2 lakh per month to Rs. 60 lakh per year/ Rs. 5 lakh per month and by such notification also covers Government Companies for such disclosures. By such notification, the amended rules may be called as Companies (Particulars of Employees) Amendment Rules, 2011.

The effect of the notification shall require the Companies including Government Companies to include a statement showing the name of every specified employee of the Company in their Board Report pursuant to Section 217 (2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Amendment Rules, 2011 which provides:

(i) If employed throughout the financial year, was in receipt of remuneration for that year which, in aggregate, was not less than Rs. Sixty Lakh for the year: or

(ii) If employed for a part of the financial year, was in receipt of remuneration for any part, of that year, at a rate which, in the aggregate was not less Rs. Five Lakh per month.

LIMITS ENHANCED FOR OBTAINING APPROVAL OF THE CENTRAL GOVERNEMENT FOR PAYMENT OF REMUNERATION TO OFFICE OR PLACE OF PROFIT UNDER SECTION 314 (1B) OF COMPANIES ACT 1956

The Ministry of Corporate Affairs has notified dated 6^th April 2011 enhancement in previous limit of Rs. Fifty thousand per month given under Rule 3 of Director's Relative (Office or Place of Profit) Rules, 2003 to Rs. Two lakh fifty thousand per month for payment remuneration to relatives or partners of the directors of the Company falling under Section 314(1B) of the Companies Act 1956. By such notification, the amended rules may be called as Director's Relative (Office or Place of Profit) Amendment Rules, 2011.

The effect of notification shall require Companies to obtain prior consent of the Company by a Special Resolution and approval of the Central Government under Section 314(1B) of the Companies Act 1956 read with Director's Relative (Office or Place of Profit) Amendment Rules, 2011, with respect to appointment of:

1. Partner or relative of a director or manager; or 2. Firm in which such director or manager, or relative of either is a partner; or 3. Private company of which such director or manager or relative of either is a director or member,

to any office or place of profit which carries a monthly remuneration exceeding Rs. Two lakh fifty thousand per month.

The notification also redefined the constitution of Selection Committee under Rule 7 of Director's Relative (Office or Place of Profit) Amendment Rules, 2011 for purpose of appointment of persons mentioned under Section 314 (1B) of the Act for Listed Companies, Unlisted Public Companies and Private Companies.